Anyone who thought that shoppers would give up buying habits
acquired during the recession may want to read the Waitrose Food and DrinkReport for 2014. Even those who visit this most upmarket of food retailers keep
a close watch on what they spend. As Mark Price, Waitrose CEO says “Britain has
become alot thriftier ...and that trend is here to stay”.
Budget consciousness, and its sister waste reduction are now
ingrained across all ages and incomes. It means fewer trips to the supermarket,
more buying only what is needed for that night’s evening meal, a constant
eye on price, and more spending in discount stores like Aldi and Lidl.
Which is not to say
that consumers shun premium products buying only the cheapest, rather that in
making a buying decision they want to be sure that they are not over paying, that
the price charged is a fair reflection of quality, and that they could not buy
similar products somewhere else more cheaply.
So we see that Sainsbury’s Taste the Difference premium
range growing sales by 4% in the last 6 months when total sales were down 0.3%
, and discounters cottoning on to the interest in premium products, offering expensive wines, lobster, free
range Bronze turkeys, and luxury versions of standard favourites like puddings
and mince pies. Waitrose’s own growth illustrates shopper willingness to buy
the exotic, even if only occasionally, and the company says that 2015 will see
further “premiumisation” with more luxury versions of standard foods like “uber
special cupcakes”, new fancy doughnuts and ready to drink cocktails.
Amidst all the hype it is worth remembering that the vast
majority of food spend goes on the basics - “sustenance and survival” in
Waitrose’s words, and it is day to day expenditure that will receive greatest
shopper scrutiny. The “Big 4” supermarkets have not fully recognised this, but
are slowly seeing that budget consciousness is now a way of life for shoppers, and is here to stay. Asda
has stated their commitment to closing the price gap with the discounters, and
in a letter which will spoil Christmas for many, Tesco’s new CEO has indicated
to his suppliers that as they are benefitting from falling commodity prices
they may have to reduce their prices in January, as the company tries to
compete against the discounters.
It is difficult to see anything but continued pressure on
suppliers and ultimately primary producers, especially where products are
heavily commodity reliant and have limited added value.
